Amazon Is Not All Of eBooks

Everyone fearing Amazon dominating eBooks again or being the “only” seller of eBooks needs the following reminders:

1) The population of iOS devices is a multiple of all eInk devices combined.

2) iOS devices are now the largest outlet for eBooks, not Amazon. That we have not seen Apple “dominate” eBooks is due to Agency pricing and the size and price of the current iPad. If Apple decides to release a smaller, less expensive iPad (or larger iPod Touch), it will become the “new Kindle.” The reason why the iPod Touch has not become that is because it’s much smaller than the 6? eInk screen people have become accustomed to. The iPod Touch does not make people think “book.”

3) With Barnes & Noble having shown everyone that people will read on an LCD screen, it’s clear that the issue is the size and price of a device, not necessarily its screen. So we have gotten the Kindle Fire too. And the Kobo Vox. And within a few months, the Google Play tablet will appear.

4) Apple is not going to close its iBookstore, Google is not going to close its Google eBookstore, Kobo — which is owned by the giant corporation Rakuten — is not going to shut down, nor will Feedbooks or any others shut down. Even Agency pricing, which eliminated competition among eBookstores, did not lead to any eBookstores closing.

5) Will Amazon undercut everyone in price? Maybe. But for how long? See my previous point. Those eBookstores will not go away. Seriously, with all of their money, neither Google nor Apple will compete against Amazon on eBook prices? Where did you ever get that idea? And let’s say they decide not to compete on price. So what? Did everyone who was paying a higher price at the Sony Reader Store dump their Readers for Kindles? Sony is still in the eBook business even while that company has been bleeding hundreds of millions. And Rakuten will not shut Kobo. There are many other ways to compete: Such as having exclusives for books. See how many writers have chosen to give their books exclusively to Amazon. Who says Apple, Google, Kobo or anyone else can’t try wooing such writers?

6) Don’t have any sympathy for Barnes & Noble. That company had no sympathy for the smaller bookstores it put out of business. Now it might be Barnes & Noble’s turn to go away, as Borders did. Did anyone of you have any sympathy for Borders, by the way? Why not? Isn’t Barnes & Noble the “new Amazon” for print bookstores?

7) Do not weep for the Big Six. eBooks were inevitable and they refused to lead their own industry, so they’ve had everything imposed on them by tech companies. Well before there was an Amazon, Microsoft did eBooks. Microsoft was a larger threat than Amazon ever can be. Seeing Microsoft do eBooks should have galvanized the Big Six into an alliance to create eBook standards, not sit back and fear the future. If the Big Six go away, eBooks won’t. Writers matter, not those megacorporations. Ask Amanda Hocking if she needed them to make her millions! Ask any self-publishing writer who’s found an audience if they had that chance with the Big Six!

8) Kindle versus ePub does not matter. What matters is DRM. It’s not file format that prevents people from moving their books from, say, a Kindle to a Sony Reader. It’s DRM. Apple made DRM go away with music. DRM can also go away with eBooks. Should that happen, anyone can use the free Calibre software to shift file formats if they need to. And that will boil everything down to what matters: Writers. People buy the work of writers and they don’t care if it’s sold at Amazon, Apple, Kobo, Barnes & Noble or elsewhere. All of those are just outlets, not products.

9) We no longer exist in a world that is led by eBook hardware. See point one. The iPad and other tablets (including rooted eInk Nooks!) can now run apps from Amazon, from Kobo, from Barnes & Noble — and vendor-independent apps, such as Aldiko and Bluefire Reader. Wrap your head around the fact that eInk devices are now the minority device for eBooks and your perspective will immediately change, your horizons will broaden, and your fear will dissipate.

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Mike Cane

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15 Comments

flyingtoastr12 April, 2012

So writers are the only ones who matter.

Fair enough. Let’s draw that out.

10 years from now Amazon is the only major ebook vendor left. BN, Sony, and Kobo long since got out of the market after being unable to meet Amazon’s loss-leading, gradually shedding their users who were poached by Amazon’s “low price guarantee”. Apple and Google remain bit players, neither particularly interested in losing as much money as it would take to compete on price with Amazon. There are still some third-party stores, and still a few people who insist on using non-Kindle apps on their multipurpose devices (to protest Amazon, or because they have large EPUB libaries, or whatever), but in most respects the mass market has all fallen into the hands of a single company.

So what happens next?

Do you really think Amazon will continue to take huge losses once they’re the only game in town? Of course not. They have two options. Either they can raise prices, risking a massive consumer backlash because of the price complacency customers have developed, thinking they “deserve” $10 bestsellers irregardless of the cost of production. Or they can start squeezing the producers in order to shore up their margins.

Look at Wal Mart. Same. Exact. Thing. And they’re not even close to having the monopoly power Amazon is being handed here.

Bezos doesn’t sell you proprietary formatted ebooks at a loss because he likes you as a person.

I fully agree that Amazon is going to extract as much as they can from their dominant position in the market. But I also know that Amazon won’t be dominant forever. It won’t be too long before some faster, nimbler, and better competitor dethrones Amazon. It has happened before in other industries and it will happen in this one.

Not to be rude, or argumentative but I’d like to answer one question asked, “How many locally owned bookstores are left in your hometown?”. All of the good ones, none of the bad. And that’s the way it should go for the publishers as well. I was overjoyed when B&N moved into my community 25 years ago, and I didn’t cry for a single bookstore that went under. They were all horrible. The quaint little children’s/YA bookstore; it’s still there. The lovely used book store; still there. The giant used book emporium downtown; still doing great business. All the little crappy, hippie, harelquin-western strip mall bookstores; gone. BDalton’s; gone. WaldenBooks; gone. Good riddance. And I’ll be very happy to see the major publishers dead and gone if they can’t stop acting like recidivistic dinosaurs.

Okay….maybe a little argumentative. But this is a cause that’s been important to me since I was a kid.

But when the tiny little bookshop was put out of business by Borders, the books you bought there still worked.

When Borders was put out of business by Amazon, the books you bought there still worked.

When Amazon is killed off by print-on-demand/ epub/ sales taxes/ their own consistent inability to actually sales into profits, or loses major publisher support because they asked for too many discounts. No whining “but my Kindle is a brick!”

Without an experienced publisher, who will design my cover art? Who will help promote my book? Who will do 3+ stages of extensive copyediting to turn it into a polished product? And, I guess… who will give me an honest and trustable opinion on whether it can sell?

Some of those things I actually know how to do my, but spending the time to do them would take away from time spent writing. If I hire someone, I’m paying to have my book published instead of getting paid for it. And there’s no guarantee that I’ll get all the money back. That doesn’t seem right.

And I would guess that most people won’t bother to pay to do the things I mentioned, because they can’t afford to or don’t want to bother; but if they don’t, the quality of books is going to go way down.

re: If I hire someone, I’m paying to have my book published instead of getting paid for it. And there’s no guarantee that I’ll get all the money back. That doesn’t seem right.

Um…yup. You become the publisher. That’s why your royalties will be higher, because you won’t be paying today’s publisher for doing all those things for you. And you get to act like a grownup and hire the copyeditor and cover artist, and whether to hire help for promotion.

And the books with lousy quality? Buyers will avoid them. Pretty simple!

Cecily makes a very good point. In Amazon’s future vision, it won’t be Amazon as the publisher assuming any of the risk of the investment, as present publisher’s do — it’ll be the author. By hiring all those people, you’re making an investment on a risky return. A publisher can diversify their risk over a number of projects — an individual can’t do that. And if Amazon obtains a monopoly, I doubt very much that there will be higher royalties in the long run. They’ll squeeze the supply side. They’re a business, after all. What bargaining power does an author who’s already sunk his/her savings into hiring a copyeditor, cover artist, and publicist have with Amazon once they hold a monopoly position? Very little, I imagine.

If the agency pricing model isn’t allowed to persist…all booksellers including Apple, Barnes and Noble, Sony, and all independent online bookstores like Better World Books will not be able to compete. Amazon is the only player in the game that can employ the loss leader strategy because they are the only ones that have the higher margin products that will offset the losses they take on e-books! The only player out there that can compete with them is Walmart…since they also sell everything under the sun to their customers. I truly believe that if agency pricing isn’t allowed…90%+ of people will buy their e-books from Amazon. If it is allowed…then smaller online bookstores will be able to survive because it’s a level playing field…everyone makes 30% margins on their sales. If there is a level playing field int terms of price…the winners will be the ones that over the best customer service, recommendations, discoverability/browsing, and social media integration.

As far as agency pricing causing e-book prices to be higher…I don’t think this is the case. It may be in the short term…but publishers will start adjusting their prices lower when they realize that people won’t pay $14.99 for an e-book. They will adjust their prices to be in line with what customers are willing to pay. It’s simple economics. Eventually…prices will probably fall to below $10 per e-book when they realized that this is the sweet spot for e-book prices. People will buy more e-books at that price than they did before…and total revenue will climb (even in the face of falling e-book prices). Moreover, publishers will become more lean because e-books don’t require the massive resources that printed books require…and margins on e-book sales will be even higher than they are on printed hardcovers…even when they are priced below $10.

You hit the nail on the head – it is all about DRM. Once we remove DRM from e-books, e-book publishers like BookTango will be able to prosper by offering not just all the formats, but complete conversion no matter what kind of reader you are. Readers want the content, and it’s an irritable fact when they have to make sure they have the correct formats, can’t change formats, etc.